Tech-based startups that focus on financial services are mushrooming today. However, there has yet been any regulation backing them up so far. This definitely draws public’s attention. UangTeman’s case study can be one of examples to that.
There are actually multiple ways to secure loans. We have known pawn shops that give people money. Being regarded as not that applicable since it involved collateral, Standard Chartered Bank Indonesia introduced another system called Non-Collateral Loan.
In general, customers aged 21-60 may propose a loan through the latter system without having to put any collateral on the table. People may propose various amount of money, from 10 to 250 million rupiah top, with around 1,55% to 2,2% of flat interest.
As technology grows, new opportunities in financial segment arise. As described above, players like CekAja, DuitPintar, HaloMoney, Pinjam, and the latest UangTeman rise and join the competition.
Each of those presents its own procedure and consequences. As for UangTeman, the startup does not get the positive welcome it expected. Instead, people regard the service as an “online usurer”.
Is UangTeman an online usurer?
To be honest, I’m not the one to answer such question since I’m not a financial expert. In my opinion, UangTeman picks the wrong time to introduce its services in Indonesia, especially with the high interest it offers.There are at least two reasons to justify that premise, both from the cultural and regulation perspective.
As for the cultural point of view, the concept doesn’t fit most of Indonesians’ belief, which is Islam. In Islam, the concept resemblances a negative action called riba. This is why many people regard UangTeman as an online usurer, as they refer the possibility of riba done by the startup.
OJK and regulation on loan
In terms of regulation, UangTeman doesn’t violate any regulation, as there has yet been any regulation in Indonesia regulates services like UangTeman. This was indicated by UangTeman’s CEO Aidil Zulkifli on our previous report. He stated that there must be regulation on these short-term loan services in Indonesia.
This is in line with the Financial Service Authority (OJK)’s statement. OJK’s Member of Commissioners of Consumer Education and Protection Kusumaningtuti S Soetiono mentioned that UangTeman doesn’t violate any law since there has yet been any law regulating about this online loan concept.
OJK’s Head of Non-Bank Financial Industry Supervisor Firdaus Djaelani was on the same page. According to those OJK’s officials, UangTeman’s service is similar to the concept of conventional usurer, only UangTeman involves technology in the process.
OJK urges people not to be trapped in the circle of getting easy money that comes along with disguised high risks.
It is an alternative to get loans
Although being bombarded with negative accusation, UangTeman still runs until today. While claiming to have thousands of members, UangTeman also plans to expand its services to Central Java and Yogyakarta. This fits UangTeman’s target market, which is ]B- or C+ social class grade.
CekAja’s CEO John Patrick Ellis voiced the same thing. “In general, payday loans tend to exploit desperate people, those who can’t fulfill their economic interests. […] The only positive thing that payday leaders have is that they are slightly better than the usurers, who are, in several case, the only alternative for those desperate ones,” he told DailySocial.
Further, Ellis added that the Annualized Percentage Rate (APR) should be the only mean of determining the interest rate and other costs. In most cases, an option that looks cheaper because of its low interest rate gets compensated with relatively higher costs.
He continued by saying that APR measures every feasible element to let consumers comparing the true values of financial products. In the U.S and the Philippines, APR is a legal mean to determine interest rate, called the “Truth in Lending Art”. Unfortunately, he said, there has yet been any regulation on this “Truth in Lending Art” in Indonesia.
What is the best way to respond this UangTeman, then? The only reason that comes to my mind is to make it as an alternative to get some loans. It’s up to each person, then, since everyone has different financial needs. The fact that UangTeman is the only financial service that can give loans to people in two hours of course is very tempting, though.
To conclude, I would like to cite a statement by Pinjam Indonesia’s CEO Teguh B. Ariwibowo. “With a good will, we believe that tech-based financial startups can be an alternative solution to slove the financial problems among the society, with each own procedure and consequences. It’s up to the people, then, to pick the best solution that fits each own’s financial needs.”